Airlines start accepting bitcoin, but remain focused
on offline currency
Bitcoin, the often tumultuous digital currency,
isthebestknownexampleofablockchain
in action, and aviation is at the forefront of
engaging with this technology too. In contrast
with the disintermediation strategy of using the
blockchain to aim for direct engagement with
passengers,earlybitcoinadoptersamongairlines
andprivatejetoperatorshavelargelybeenusing
companiesspecialisinginthecryptocurrency
to enable payment and immediately transfer it
into dollars, yen, and so on. This “bitcoin-as-a-
service” allows airlines to familiarise themselves
withsomeoftheissuesinalow-riskway.
JapaneseairlinePeach,alow-costsubsidiary
ofANA,hasbeenworkingwithBITPointJapan
toprovidetheabilitytopurchaseticketsusing
bitcoin, using the BITPoint Pay application
on Peach’s backend and in the passenger’s
smartphone,whichreadsaQR2Dbarcode
and transfers the bitcoin equivalent in yen to
Peach’s account.
“Our alliance includes the BITPoint payment
forthetickets,”ChiharuHayashi,adirectorof
BITPoint Japan, tellsAustralian Aviation,but
highlightsthat,inaddition,“afteracustomer
arrives in Japan, they go shopping and go to
restaurants, and they can pay through bitcoin.
Whatwecansayis:travelwithonlybitcoin”is a
realityforBITPointJapan’scustomers.
Using the BITPoint Pay app, travellers
store the currency in a virtual wallet on their
smartphone for payments while in Japan, which
are typically made using the QR codes that are
commonly used within the country.
Whenpurchasingaticketusingbitcoin,the
process is similar to a normal payment process,
withafewkeyexceptions,includingtheuseof
theBITPointPayapp.
“Peach shows the QR code, and the traveller
scans the QR code and sends it via bitcoin to
Peachwallet,”Hayashisays.“Then,atBITPoint
Japan,wewillsellthebitcoinandexchangeit
to yen. We transfer the Japanese yen to Peach’s
account.ItmeansthatPeachdoesn’thavetocare
about the fluctuation risk of the bitcoin.”
Indeed,nothavingtomonitor,hedgeor
provide for fluctuations of bitcoin to various
national and international currencies is a benefit
forairlines,andisakeypartofthepartnership
betweenPeachandBITPointJapan—aswellas
seemingly every other airline or private jet outfit
that accepts bitcoin.
Oncethey’reinJapan,Hayashisays,the
benefitforpassengersisthat“theydon’thave
tobringtheirowncash.Theydon’thaveto
exchange their cash. They just bring their mobilephonewithbitcoin.Asyouknow,therecentprice
trend of bitcoin is going up, so most of the bitcoin
holders have unrealised profit, so travellers can
use their unrealised profit for travel.”
OnPeach’spart,Hayashisays,“atthismoment,
Peachjustsellscheap[airline]ticketstothe
customer.Theywouldliketohaveacustomer
database through bitcoin payment. They are going
to create their own wallet, which is Peach wallet.”
When passengers make payments
at restaurants, souvenir shops, or other
destinations,Peachcanthenminethat
information for loyalty purposes, including,
Hayashi suggests, direct email marketing.
Passengers are even paying for private jet
flights with Bitcoin, says Privatefly cofounder
and marketing director Carol Cork. “Part of the
philosophyofourbusiness,really,wastomake
bookingaprivatejetorprivatecharterflightsall
overtheworldmuchquicker,mucheasierand
much faster to access. When we launched the
business,wewerelookingathowtodigitalise
private jet booking, and that was involving the
userexperience,thecustomers,andalsoforthe
operatorsandthesupplysideofthebusiness
as well.”
“Bitcoinwasverymuch,atthebeginning,a
customer demand-led initiative,” Cork says. “We’d
beencloselyfollowingBitcoinourselves,withour
financedirector,andIthinkitwasattheendof
2013 we started to receive requests from flights
toacceptit.WehaveaplatformcalledTrustpilot,
a verified review system, and you can see on
therewehadcustomerssaying,‘Oh,ifonlyyou
accepted bitcoin.’
“Our ongoing aim is to make choosing, buying,
payingforprivatecharterflightsasfast,efficient
andwithasmuchchoiceaspossibleforthe
customer.Sothatwasalogicaladditionforus,
tolookatpaymentoptionsandtoseehowwe
could potentially bring paying by Bitcoin into the
paymentoptionsthatwealreadyoffered.”
In addition, Cork notes, “one of the major
benefitswasthatBitcoinpaymentsareveryfast,
veryflexibleandthey’renotsubjecttobanking
hours. We look at everything from how fast people
arebooking,theleadtimesbetweenaninquiry
and a booking, what time of day they’re booking.
Weknowthat[banking]timelagisnotonlya
hasslefactor,butitalsocanbeamajorfactor
whethersomeonecomesandbooksaprivate
flightornot.It’showeasyandquickwemakeit
forsomeonetobook,andpartofthatbookingis
obviouslythepaymentprocess,sothemorewe
canopenuptheoptionstoallowpeopletomake it
faster and easier to pay, then the better.”Blockchain helps solve the problems
and reduce the threats of the status
quo by creating multiple, encrypted
copies of the database ledger
A blockchain, simply, is a sequence of
pieces of data (the block) encrypted
via a complex process called hashing,
and containing a connection to the
previous block in the sequence (the
chain).
Any one block in the sequence
cannot be changed without
recompiling the rest of the chain in
sequence, which is impractical because
of the computing resources required.
Algorithms in the blockchain when it
is created (often referred to in certain
contexts as a “smart contract”) ensure
that this resource demand is future-
proofed for newer, faster or more
powerful processors.
As the length of the chain increases,
it becomes more expensive in
processing terms for any malicious
actor to try to change an earlier block
and recompile the rest of the chain.
In addition, “The algorithm adjusts
in such a way that each computation
of that proof of work will take about
10 minutes on average,” Izmaylov
explains.
“The algorithm adjusts so it doesn’t
matter: you can have a much, much
better machine – and theoretically in
a couple of years we’ll have machines
that will be two times as fast as today’s
machines – and it will still take ten
minutes.”
That 10 minutes is calculated
“via the algorithm, so basically the
complexity of that computation will
be constantly adjusted, completely
automatically,” Izmaylov says.
The network also provides security
because the consensus on the “true”
chain is taken from all holders of the
blockchain, so that a malicious actor
would need to first recompute and
then distribute a changed chain to
more than 50 per cent of the network.
This “51 per cent” attack requires,
Izmaylov notes, “51 per cent of the
hashing power, 51 per cent of the
computational power. That’s what
you need in order to change the
future truth. So, where the public
permission is blockchain, such as
Bitcoin or Experia for example, you
will never be able to change the state
of the database that’s already been
written into the ledger. It will be
computationally unfeasible.”
That assumption is based on the
idea that the blockchain is distributed
among multiple hosts, either as a
private or public blockchain. In the
aviation context, it could be a network